Multi-Party Computing (MPC) technology for fast and secure withdrawals

In Trading Strategies, Product

At Liquid, security is in our DNA. We constantly seek best-in-class innovations to strengthen our security and improve our customer experience. A balance is required between security innovation and governance in the crypto industry. This is a risk-based approach that enables us to deploy cutting-edge technologies to protect customer funds while remaining compliant with regulators and setting an example to others in our industry.

Behind the scenes, we have been gradually rolling out Multi-Party Computing (MPC) technology to improve service levels without compromising the security of our clients’ assets.

Our integration of MPC technology has now passed our internal risk assessments, enabling us to begin fully deploying the technology across our platform, serving various cryptographic assets (including BTC, ETH, XRP, BCH, LTC, TPAY and various ERC-20 tokens) Liquid custodies on behalf of our global customers, excluding Japan residents.

Liquid’s MPC-based wallets have been extensively penetration-tested internally and externally. This advancement in security allows us to reduce our dependence on cold wallet storage to a 90% threshold to drastically improve Liquid’s withdrawal process whilst still maintaining our zero-compromise level of security.

For the Japan market, all customer funds remain in 100% cold wallet storage in compliance with local regulations in that jurisdiction.

Round-the-clock withdrawals

This means that for global Liquid users, we are able to process withdrawals multiple times per hour. Already almost 90% of Bitcoin and XRP withdrawals and 75% of ETH withdrawals are processed in less than 10 minutes..

MPC-based security allows Liquid to adopt a secure, scalable, distributed model of trust with no singular point of compromise, resolving the dilemma hot versus cold wallets and self-versus-managed custody.

With MPC, the master private key never exists and is always split among multiple entities as encrypted key shares. Unlike Shamir Secret Sharing technology, the key shares are never united into one entity; not at generation, nor at usage.

Transactions from the MPC wallet need to be signed by several key shares, deriving a signature from them, without the private key itself ever existing as one piece. Each key share alone reveals no information about the private key.

We are proud to be one of the first major cryptocurrency exchanges in the world to adopt and embrace MPC technology in a live setting.

By utilizing state of the art technology like MPC, Liquid is improving client service levels, reducing operating costs and eliminating single points of failure. Liquid is preparing for the next wave of investors and market participants that demand the highest levels of security and performance.

All guest authors’ opinions are their own. Liquid does not endorse or adopt any such opinions, and we cannot guarantee any claims made in content written by guest authors.

This content is not financial advice and it is not a recommendation to buy or sell any cryptocurrency or engage in any trading or other activities. You must not rely on this content for any financial decisions. Acquiring, trading, and otherwise transacting with cryptocurrency involves significant risks. We strongly advise our readers to conduct their own independent research before engaging in any such activities.

Liquid does not guarantee or imply that any cryptocurrency or activity described in this content is available or legal in any specific reader’s location. It is the reader’s responsibility to know the applicable laws in his or her own country.


Seth Melamed

COO of Liquid